New Delhi. Since the beginning of the Lok Sabha elections in India, there was a lot of instability in the stock market. Especially, foreign investors sold on a large scale in view of the low voting in the initial phases. This trend continued even after the results.

However, now Foreign Portfolio Investors (FPIs) have returned to the equity market. They made a net investment of Rs 2,743 crore on the last day of the last trading week i.e. Friday (14 June). But despite all the positive signs of the Indian stock market, the overall net investment of foreign investors remained negative.

Selling continues in June as well 

According to the National Securities Depository Limited (NSDL), foreign investors have continued to sell in June as well. They have made a net withdrawal of Rs 3,064 crore in June till Friday. This follows the long trend of selling that has been going on since the Lok Sabha elections.

FPI flows showed a lot of volatility in the first week of June. Especially, due to the difference in the results of exit polls and actual election results. On June 3, foreign investors bought shares worth Rs 6,521 crore, encouraged by the exit poll results.

But the next day, when the actual results of the Lok Sabha elections were not as per the exit polls, the stock market fell drastically. The confidence of foreign investors also wavered and they sold almost double the amount of their purchases the day before, i.e. Rs 12,259 crore.

trust returned

However, after the Modi 3.0 government came to power, foreign investors' confidence in the Indian market seems to be restored and they have started investing. But, their concern is still about the valuation of the Indian stock market, which is at an all-time high due to the bullish stance of domestic buyers.

VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, "If the Indian market continues to rise from here, then foreign investors may start selling heavily again. Then they can buy in other markets like Hong Kong, which is much cheaper than India."

However, the Indian market is strong. Also, retail investors also made big purchases to take advantage of the fall in the market. In such a situation, there is pressure on FPIs to reduce their selling. This thing was seen throughout May, when despite the continuous selling by foreign investors, the Indian stock market did not come down much.